Chart Of The Day - Türkiye Take-off

Not every day you see a chart like this...

Hyper: Turkish equities are up +640% off the March 2020 lows… in nominal local currency terms. Seems impressive, and in many ways it is, but there are some nuances.

• The chart shows the MSCI Turkey index in local currency terms. That should be the first clue — the TRY (Turkish lira) has dropped -77% vs the US dollar over the same period. So in USD terms over the same period the price return is a much lower, but still respectable +80%.

• Another aspect is inflation, across that same period, Turkey’s CPI has gone up about +275% — as such inflation adjusted or real price local currency denominated returns therefore drop to ~95%.

• So in some respects it’s a bit of a lesson in terms of inflation and/or FX adjusting returns to get a sense for the true/effective picture for both domestic and global investors respectively. But it’s also a lesson in terms of what hyperinflating nominal growth can do to stock prices in nominal terms.

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